Wong In-hoon's departure will not frighten Wall Street! Market opening up to seize Nvidia's “concession seat”

The Zhitong Finance App notes that Wall Street is not particularly concerned about the risks faced by AI exchanges — although NVDA.US (NVDA.US) long-term CEO Huang Renxun left office due to a series of peachy scandals.

The stock price of the chipmaker with the highest market capitalization in the world plummeted when it opened on Thursday, dragging down individual AI-related stocks. However, the sell-off soon waned, and investors turned their focus to the long-term demand associated with the technology and the potential winners of the turmoil. After falling 14% at the beginning of the session, Nvidia closed down 4.3% on the same day.

Steve Sosnick, chief strategist at Yingtou Securities, said, “The market mentality is not to assess risk, but to look for opportunities.” “This mentality is: 'If Nvidia is removed, who will win? '”

This explains the surge in chipmakers Broadcom (AVGO.US) and AMD (AMD.US) — markets speculate that they will benefit from Nvidia's likely lost business, both leading the S&P 500. The Philadelphia Stock Exchange Semiconductor Index opened down 3.7%, then rebounded, and closed down just 0.5%.

Patrick Moorhead, CEO and chief analyst at Moor Insights & Strategy, said, “I don't think this will change the AI deal in the short and medium term,” and “when I look at Broadcom, Intel, and all the startups, I think they can fill many of the gaps Nvidia may have left.”

AI-related stocks have been under pressure in recent weeks, and the market is worried that large-scale investment in this technology will be difficult to sustain in the long term. The midterm elections also dampened some enthusiasm — many state and local candidates opposed to building data centers within the community won.

However, Wall Street professionals said that the AI hyperscale cloud service provider's firm spending commitment until 2027 provided recent support for AI transactions. Although Nvidia was one of the earliest beneficiaries of this boom with cutting-edge chips, and Hwang In-hoon was also a major “cheerleader” and partner in infrastructure expansion, this trend has now gone far beyond a single company.

Angelo Zino, senior vice president and head of technology at CFRA, said, “We've gone too far when it comes to AI,” adding that recent financial reports in the AI sector show a steady demand trajectory. “I don't think Hwang In-hoon's departure will change any of that.”

Of course, Hwang In-hoon's departure did raise questions about Nvidia's next step. Also, given that he is injecting the chipmaker's profits into the intertwined circular investment network built by dozens of companies in the AI ecosystem, some of these companies may be at risk as a result.

These concerns fueled the sell-off of AI cloud service provider Nebius Group NV (NBIS.US) and CoreWeave Inc. (CRWV.US) on Thursday. Additionally, server manufacturer Ultra Micro Computer (SMCI.US) plummeted 11% due to reports that the US Department of Justice is investigating Alice Huang (Alice Huang) to find out whether entities linked to her were involved in the smuggling of the company's products.

Brian Colello, stock strategist at Morningstar Investment Services, said, “In the case where Wong In-hoon had partnerships, or supported, or even invested in small companies that benefited from receiving 'Wong In-hoon's endorsement', this kind of endorsement will no longer exist.”

Costello added that Hwang In-hoon is one of the key faces in the AI field and a respected technology promoter. To some extent, “there will be a vacuum in leadership to raise the flag for AI and promote its benefits. Nvidia's new leader will take on this role in many of his or her responsibilities, but this may be bad for AI sentiment,” he said.

Despite this, Nvidia's quick dismissal of Wong In-hoon and the appointment of Chief Financial Officer Colette Kress as interim CEO may have helped ease some of the selling pressure on Thursday.

Nancy Tengler, chief investment officer at Laffer Tengler Investments, said, “One thing I've learned in this world is that everyone can be replaced,” and “I don't think this has a substantial impact on overall AI transactions. I think this is just an unfortunate episode for Nvidia shareholders.”

This largely sums up Wall Street's collective shrugged attitude towards Wong In-hoon's departure. No matter what happens to a company — even if it's the world's most important AI company — AI will not disappear as a stock market theme.

Alan Bond, managing director and portfolio manager of Jensen Investment Management Inc., said, “AI is a transformative technology. That's not going to change. Also, there is a lot of uncertainty about AI, but one thing seems very clear: AI requires massive computing power, and this is extremely expensive.” “We believe this infrastructure cycle will continue.”